Following weeks of speculation and rumors, Apple on Wednesday officially announced it acquisition of Beats Electronics for a reported $3 billion, with co-founders Jimmy Iovine and Dr. Dre expected to join the Cupertino, Calif. company in as-yet-undisclosed executive roles.

The highly anticipated -- and controversial -- sale includes Beats' subscription streaming music service Beats Music and Beats Electronics, which produces high-margin audio equipment like headphone and speakers. The deal will also bring on Beats co-founders Iovine and Dr. Dre, whose real name is Andre Young.

"Music is such an important part of all of our lives and holds a special place within our hearts at Apple," said Tim Cook, Apple's CEO. "That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world."

Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.

"I've always known in my heart that Beats belonged with Apple," said Iovine, who was a personal friend of late Apple co-founder Steve Jobs. "The idea when we started the company was inspired by Apple's unmatched ability to marry culture and technology. Apple's deep commitment to music fans, artists, songwriters and the music industry is something special."

While Apple's announcement touched on all Beats assets, of special interest was Beats Music which launched in January. Industry watchers speculated that the now-official deal was crafted to tie-in Beats Music with iTunes Radio, thus giving Apple an easy road into the world of subscription music streaming, though reports say the service will be kept a separate entity for now.

Others guessed Apple was eyeing Iovine and Young, who would be brought on as an acqui-hires. The music mogul and hip-hop star have considerable sway in the industry and could help secure content for Apple's fledgling streaming service.

"Music is such an important part of Apple's DNA and always will be," said Apple SVP of Internet Software and ServicesEddy Cue. "The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years."

The deal is expected to close in Apple's fiscal fourth quarter pending regulatory approval.

Apple said it would pay $2.6 billion in cash and $400 million in equity for Beats Music, a subscription music-streaming business, and Beats Electronics, which makes pricey headphones, speakers and audio software.

Beats co-founders—rap star Dr. Dre and music mogul Jimmy Iovine —will join Apple, and Apple will continue to use the Beats brand, a first for the company.

Quote:

Mr. Iovine, a longtime friend of Apple co-founder Steve Jobs, said the two men's titles would simply be "Jimmy and Dre."

What makes you think apple bought them only for their sound equipment? You do realize they have a streaming music offering as well, right?

Yes, one with a tiny amount of market penetration. Sure, there conversion rate for said service is impressive, but most of the customers are likely fans of Dr Dre & the expensive yet cheaply designed headphones that they offer.

Whatever developments come out of this acquisition will eventually be well worth $3 billion. Especially if it drives iTunes Radio adoption.

Getting the service into other primary markets such as the UK would be a great start. They're really dragging their heels on this, it's a shame they don't invest a similar priority into their customers overseas.

Tim Cook confirmed for one of the worst CEOs in Apple's history. He will go down like Ballmer. It won't be long before he starts throwing chairs around as their competitors start eating into their revenue more and more.

Tim Cook confirmed for one of the worst CEOs in Apple's history. He will go down like Ballmer. It won't be long before he starts throwing chairs around as their competitors start eating into their revenue more and more.

Apple has to deal with Samsung ripping them off, Beats headphone as knocked off every day in china and you can buy Beasts looking headphones for $35 on the street. As we have seen with android, people want to be seen with a smart phone and if they can get it free all the much better, so do you really think people care whether the headphone are actual Beats headphone or a look a like for $35. I am also beginning to see look alike which from 10 feet look like Beats but in fact they are a different company. There is nothing unique about Beats where most consumers will pay that cost.

With that said, there has to be more about this deal other than the Headphone or even their subscription music service and I highly doubt that Cook will let the public know what the real value of the deal is all about.

Notice they are keeping the Beats branding intact. So the engineering is not what Apple was after. If it were, they would have bought a boutique audiophile firm and dropped its branding, relabeled product with apple branding and called it a day.

And for all we know, they may still buy up high end audio firms and brand the acquired wares with Beats branding. He'll, Apple may already own patents that could immediately improve Beats product line.

The haters won this round. Maybe Browett can get a second chance too. Maybe Forstall will come back and save the company someday from Tim "don't call me Sculley" Cook, with reams of green felt and digital wood veneer. /s

The headphone line is profitable but that alone isn't the whole reason why the acquisition happened.

Iovine and Dre have connections.
The headphones deliver profit and there's plenty of innovation that can happen here
Beats Music....Apple should be ready to do something good iTunes/iTunes Radio/iTunes Match and now iSubscriptions LOL

They have connections? So what? Surely Apple can get any meeting they want with any executive they want. Either the deal works for content providers or it doesn't.

The haters won this round. Maybe Browett can get a second chance too. Maybe Forstall will come back and save the company someday from Tim "don't call me Sculley" Cook, with reams of green felt and digital wood veneer. /s

If Forstall did come back you'd love him and hate Cook. Sure we've always been at war with EastAsia.

Well shit. I guess I'll wait to hear Cook's rational, but in the meantime I'm not super happy about this.

Why not. Stylish popular designs that actually sell and make a high margin, a streaming service that actually has the best curation system in the market, and two music industry giants on board for all your music initiative from promotions to negotiations, to insight on pop and urban culture, to music production. Add to that the fact that if having Apple's marketing and design behind them doesn't increase revenue at all it would still pay for itself in two years since they did 1.5 billion last year before getting into streaming. Sounds like a great move. It also lets Cook focus on other things now that there will be a entertainment chief with connections rivaling Jobs and he no longer has to run retail himself.